Furthermore, some experts believe buy-to-let has been given a shot in the arm with the extension of the SDLT on £500,000 properties until June 30 and for £250,000 properties until September 30.
Imogen Lea, tax consultant at law firm Wilsons, says the SDLT extension could lead to "a second wave of buy-to-let investments being made".
She referred to figures from HM Revenue & Customs which show that, in the fourth quarter alone of 2020, 61,800 buy-to-let properties were purchased, the highest quarterly figure since 2017, while 102,267 buy-to-let properties were bought since the SDLT holiday came into effect in July 2020.
Wilsons believes the SDLT holiday was a significant contributor to this upturn in property transactions.
Lea says: "The welcome three-month extension to the SDLT holiday gives potential property investors a second chance to purchase with no SDLT up to £500,000.”
“The extension to properties valued at £250,000 or less, which will be introduced in July and run to September 30, could see more sustained growth in buy-to-let investments in parts of the country where property prices are lower, or in smaller dwellings.”
“The million-dollar question is whether this will be enough to keep the market buoyant in the medium and long-term.”
That said, with interest rates still at a record low and likely to remain so, Lea believes this factor could attract more investment to the residential property market for income-seekers disappointed with the near-zero interest on bank deposits and gilts.
Alternatives
"My advice is to anyone that is considering buy-to-let", Varsani adds, "is to work with a great broker and a great accountant. Ensure you understand the numbers, calculate the net return or yield, and think long term, not just short term."
King believes many landlords will seek other tax-effective alternatives in 2021 and beyond.
She says: "With so many other asset classes to consider, from crowdfunding to real estate investment trusts, for example, buy-to-let as an investment will continue to look less attractive as the advantages of doing so become fewer in number."
As FJP Investment's Johnson concludes: "Time will tell if there is indeed a mass exodus of investors from the buy-to-let sector, but there is far less appetite to be a landlord.”
simoney.kyriakou@ft.com
